In a conference in Indonesia, IMF Managing Director Christine Lagarde urged countries to “de-escalate” trade wars was they could hurt “innocent bystanders”. She said, “We certainly hope we don’t move in either direction of a trade war or a currency war. It will be detrimental on both accounts for all participants… and there would also be lots of innocent bystanders.”
Regarding recent depreciation of the Chinese Yuan, Lagarde said it’s mainly driven by the strengthen of Dollar. And she noted that Yuan has not depreciated as much against a basket of currencies. She acknowledged that “we’re seeing more and more countries, China included, let their currencies fluctuate.” At the same time she also supported “the move of China toward (currency) flexibility” and urged China to go down that path.”
